Estimate the cost of capital of a company given the following data:
Assume the SP500 is a proxy for the stock market.
The yield on the 10-year treasury note is 2.90%
The Sp500 forward P/E ratio is 22
Growth rate = 3.50%
The SP500's payout ratio = 80.00%
The company beta = 1.20
Assume the CAPM holds.